ED cannot act as a 'super cop' beyond the limits of PMLA: Karnataka High Court

According to an NDTV report, the Karnataka High Court, while drawing a clear line regarding the powers of the Enforcement Directorate (ED), has stated that this investigative agency is "not a super cop to investigate any matter" and cannot set aside the statutory framework to build the foundation of a money laundering investigation on its own. The court ruled that the ED must not act like an ordinary private individual but must only exercise the powers explicitly granted to it under the Prevention of Money Laundering Act (PMLA). The court clarified that the ED's power is "derivative and not original".

Justice M.I. Arun quashed the ECIR and the resulting proceedings initiated by the ED against several petitioners, including Karnataka Congress MLA K.Y. Nanjegowda and others associated with him. The court also set aside the proceedings arising from a private complaint filed by the agency. Furthermore, the High Court quashed the order of the PMLA authority that confirmed the attachment of properties and directed the return of items seized from one of the petitioners.

This verdict came on petitions arising from an ED investigation linked to allegations of staff recruitment at the Kolar-Chikkaballapur District Cooperative Milk Producers Union Limited (KOMUL). Advocate Mayank Jain presented arguments on behalf of several parties, including petitioners associated with Congress MLA K.Y. Nanjegowda. They had challenged the ECIR, the resulting proceedings under the PMLA, and the private complaint filed by the ED.

The High Court emphasized that proceedings for the offence of money laundering cannot exist independently without the statutory requirement of a predicate offence. Taking note of the arguments presented by advocate Mayank Jain, the court stated that the ED's role under the PMLA begins only when a primary law enforcement agency registers an FIR or a formal criminal complaint regarding a scheduled offence.

The court stated that the ED's power is "derivative and not original," and the agency cannot initiate an investigation on its own (suo motu) based merely on an independent suspicion of money laundering. The court also clarified that when the foundation or the scheduled offence under the PMLA ceases to exist, the proceedings under that Act cannot be continued.

Thus, the Karnataka High Court has defined the scope of the ED's powers, set limits for the investigative agency, and provided relief to the victims by quashing the proceedings related to the case.